Shein to invest $15M in supplier factories - The Entrepreneurial Way with A.I.


Friday, December 9, 2022

Shein to invest $15M in supplier factories


Dive Brief:

  • Fast fashion giant Shein plans to spend $15 million over the next three or four years to upgrade hundreds of factories in its supply chain as part of its responsible sourcing program.
  • The money will go toward “physical enhancement projects” at suppliers’ factories. The company said 30 projects will be complete by the end of the year, 100 at the end of 2023 and 300 inside of four years.
  • Shein also plans to double the amount it invests annually in its responsible sourcing program, bringing total spend to $4 million. The move follows a company investigation into working conditions at two supplier factories, which Shein said found issues in employee working hours.

Dive Insight:

As Shein has grown its global revenue and footprint, so has scrutiny around its supply chain and sustainability profile.

The company’s internal investigation into suppliers was prompted by a documentary out of the U.K. that featured exhausted workers trying to keep up with product demands. 

Shein said its own investigation, carried out by independent auditing firms, refuted “most of the allegations” in the documentary. According to Shein, for example, pay at the factories featured in the documentary complied with local laws and regulations and was “significantly” above minimum wages in the Chinese city of Guangzhou, as well as regional averages for similar work. 

At the same time, Shein’s investigation found that hours at the factories were higher than permitted by local regulation, though “significantly less than claimed in the documentary,” according to the company. Shein said it has since raised the issue of work hours with the manufacturer and scaled back orders until it takes “effective action.” 

While Shein defended itself and its suppliers against the documentary’s claims, the company also said its increased investment means it can ramp up unannounced checks on suppliers, as well as invest more in compliance training.

Shein reported 2,600 independent audits of supplier facilities in the past 12 months. In its 2021 sustainability report, Shein said working hours accounted for 14% of the violations in its supply chain audits.

The company also said it has implemented a feedback system allowing workers in its contracted factories to submit complaints anonymously via email, phone or the messaging app WeChat.  

The quick turnaround in fast fashion supply chains has long created challenges in ensuring fair and safe labor practices, and scrutiny on fashion as a whole has increased. The sheer volume of fast fashion’s production also creates myriad other sustainability challenges, including around climate and the environment. 

For instance, an academic study this year of H&M and Everlane in the journal Cleaner Supply Chain and Logistics found that “that fast fashion has failed to sufficiently engage upstream and downstream stakeholders” in their sustainable supply chain strategies.

In September, Shein announced its intent to cut emissions by 25% across its supply chain by 2030, which represented one of the company’s first public steps to cut its carbon footprint. Its plan includes working with suppliers to transition to renewable energy sources and reduce energy use.


Ben Unglesbee, Khareem Sudlow